How to Compare KiwiSaver Funds: 5-Step Guide
To compare KiwiSaver scheme funds, evaluate five factors against your retirement timeline: risk tolerance, Total Annual Fund Charge, historical returns over five or more years, fund type (conservative, balanced, growth, or aggressive), and provider features. General information only; consult a licensed financial adviser for personalised advice.
New Zealand KiwiSaver schemes collectively hold tens of billions of dollars across hundreds of funds (source: FMA KiwiSaver annual reports). For typical members the contribution horizon spans 30–40 years, so the compounding effect of fund-type choice, fees, and contribution rate is material. Illustrative — even sub-1-percentage-point differences in fees or net-fee returns can shift the final balance by a six-figure amount over multi-decade horizons.
The good news? Once you understand the key factors—risk tolerance, fund types, fees, performance, and your personal timeline—choosing the right KiwiSaver becomes straightforward. This guide will equip you with everything you need to make an informed decision.
Step 1: Assess Your Risk Tolerance
Risk tolerance is your ability and willingness to accept investment volatility in exchange for potentially higher returns. It's the foundation of choosing the right fund type.
Understanding Investment Risk
In KiwiSaver, risk and potential return are directly related. Higher-risk funds (growth funds) invest more heavily in shares and property, which can fluctuate dramatically in value but typically deliver higher returns over the long term. Lower-risk funds (conservative funds) focus on bonds and cash, offering stability but lower growth potential.
Conservative Investor
Prioritizes capital preservation, uncomfortable with market volatility, near retirement
Balanced Investor
Accepts moderate fluctuations for steady growth, 10-20 years until retirement
Growth Investor
Comfortable with volatility, focuses on long-term gains, 20+ years until retirement
Key Questions to Ask Yourself:
- •How would you feel if your KiwiSaver account balance dropped materially (illustrative — say, twenty percent or more) in a market drawdown?
- •Can you afford to wait years for your investments to recover from a market crash?
- •Are you investing for 20+ years, or do you need access sooner (e.g., first home)?
- •Do you have other investments or savings to fall back on?
Step 2: Understanding KiwiSaver Fund Types
KiwiSaver scheme funds are generally categorized into four main types based on their asset allocation. Understanding these categories is crucial to matching a fund with your risk tolerance and goals.
Conservative Funds
Low RiskAsset Mix: Typically 80-100% in cash and bonds, 0-20% in shares and property
Suited to:
- • People within 5 years of retirement
- • Risk-averse investors
- • Those saving for a first home within 3-5 years
- • Retirees who keep funds invested
Characteristics:
- • Lower long-term returns historically (illustrative range, past performance not a guarantee)
- • Minimal volatility
- • Capital preservation focus
- • Steady, predictable growth
Illustrative example return: A $50,000 balance might grow to $57,500 after 3 years (assuming 5% p.a. return)
Balanced Funds
Medium RiskAsset Mix: Typically 40-60% in shares and property, 40-60% in bonds and cash
Suited to:
- • People 10-20 years from retirement
- • Moderate risk tolerance
- • Those seeking balanced growth
- • Investors who want diversification
Characteristics:
- • Moderate long-term returns historically (illustrative range, past performance not a guarantee)
- • Moderate volatility
- • Growth with some stability
- • Most popular fund type
Illustrative example return: A $50,000 balance might grow to $63,000 after 3 years (assuming 8% p.a. return)
Growth Funds
High RiskAsset Mix: Typically 70-100% in shares and property, 0-30% in bonds and cash
Suited to:
- • People 20+ years from retirement
- • High risk tolerance
- • Young investors (under 40)
- • Long-term wealth accumulation
Characteristics:
- • Higher long-term returns historically (illustrative range, past performance not a guarantee)
- • High volatility
- • Maximum growth potential
- • Can experience significant drops
Illustrative example return: A $50,000 balance might grow to $66,500 after 3 years (assuming 10% p.a. return)
Aggressive Funds
Very High RiskAsset Mix: 100% in shares, often with higher exposure to international and emerging markets
Suited to:
- • Very young investors (under 30)
- • Very high risk tolerance
- • 30+ years until retirement
- • Maximum growth focus
Characteristics:
- • Highest potential long-term returns historically (illustrative range, past performance not a guarantee)
- • Extreme volatility
- • No capital protection
- • Requires strong stomach for losses
Illustrative example return: A $50,000 balance might grow to $69,000 after 3 years (assuming 11% p.a. return), but could also drop to $40,000 in a market crash
Quick Tip: Many providers offer default funds that automatically adjust your asset allocation as you age, shifting from growth to conservative. These "lifecycle" or "target date" funds can be excellent hands-off options. See detailed fund type comparison →
Step 3: Compare KiwiSaver Providers
Not all KiwiSaver providers are created equal. Even within the same fund type (e.g., balanced), returns and fees can vary significantly between providers.
What to Look for in a Provider
1Performance History
Look at 5-year and 10-year returns rather than short-term performance. Consistent returns over time matter more than occasional spikes. Compare funds within the same category (e.g., balanced vs. balanced) for fair assessment.
2Fund Manager Reputation
Established providers with experienced teams tend to deliver more consistent results. Research the fund manager's track record, investment philosophy, and team stability.
3Investment Approach
Some providers focus on passive index tracking (lower fees), while others use active management (higher fees but potentially higher returns). Understand whether the provider invests ethically, sustainably, or follows ESG (Environmental, Social, Governance) principles if that matters to you.
4Customer Service & Technology
Can you easily access your account information online or through an app? Is customer service responsive? Can you switch fund types easily? These practical factors matter for long-term satisfaction.
5Fund Size & Stability
Larger funds often benefit from economies of scale, potentially offering lower fees. However, smaller boutique providers can sometimes deliver superior personalized service and niche investment strategies.
Major KiwiSaver Providers:
- •Simplicity - Known for low fees, passive investment approach
- •Fisher Funds - Active management with long track record
- •Milford Asset Management - Active management approach
- •ANZ - Largest provider by members, diverse fund options
- •Kernel - Low-cost index fund specialist
- •Generate - Ethical and impact investing focus
Step 4: Understand the Importance of Fees
Fees are one of the most critical factors in choosing a KiwiSaver scheme fund. Even small differences in fees compound dramatically over decades, potentially costing you tens of thousands of dollars.
Types of KiwiSaver Fees
Annual Management Fee
Charged as a percentage of balance per annum, expressed as the Total Annual Fund Charge (TAFC). This is the main fee figure to compare between funds within KiwiSaver schemes; sourced from FMA Disclose. Compare net-fee return rather than fees alone.
Performance Fees
Some providers charge extra fees when the fund outperforms a benchmark. These can be worthwhile if the fund consistently delivers superior returns, but watch for high performance fee structures.
Administration Fees
Fixed annual fees (e.g., $30-$50 per year) that cover account administration. These matter more for smaller balances.
Other Costs
Trading costs, buy/sell spreads, and underlying investment costs are usually included in the total fee disclosure but can add up.
Illustrative Fee-Impact Mechanics
Hypothetical comparison — illustrative only. Actual outcomes depend on real returns net of fees and tax. Compounding mechanics: a sustained percentage-point fee difference reduces both the in-period balance and future growth on that balance. Over a multi-decade horizon, even sub-1-percentage-point fee differences can compound to a six-figure swing in the final balance.
Model your own situation using your fund's published Total Annual Fund Charge (TAFC) and the fees-impact calculator. Source TAFC figures from the FMA Disclose register.
Fee vs Performance Balance:
Low fees alone are not a complete picture. Compare net return after fees (and after PIE tax) over multi-year horizons. Illustrative — a higher-fee fund with consistently higher net returns can outperform a lower-fee fund with lower net returns. Past performance is not a guarantee of future results. Use our fees calculator →
Step 5: Evaluate Performance Metrics
Past performance doesn't guarantee future results, but it provides valuable insights into how a fund has been managed and how it might perform going forward.
Key Performance Indicators
5-Year Average Return
The most commonly cited metric. Compare a fund's 5-year net-fee return to its category peers (e.g., balanced vs balanced). Note: past performance is not a guarantee of future results.
10-Year Average Return
Even better indicator of long-term performance. Captures how the fund performed through different market cycles, including downturns and recoveries.
Volatility (Standard Deviation)
Measures how much returns fluctuate. Higher volatility means bigger swings up and down. Conservative funds should have low volatility; growth funds will have higher.
Sharpe Ratio
Risk-adjusted return metric. Higher is better. It shows how much return you're getting for the risk you're taking. A Sharpe ratio above 1.0 is considered good.
Maximum Drawdown
The largest peak-to-trough decline the fund has experienced. Shows worst-case scenario performance during market crashes. Important for understanding downside risk.
Category Ranking
Where the fund ranks among peers (1st quartile, 2nd quartile, etc.). Consistent top-quartile performance over 5-10 years is a strong signal of quality management.
Where to Find Performance Data:
- •Provider websites (check fund updates and quarterly reports)
- •Sorted.org.nz (independent government resource)
- •Morningstar (professional fund ratings)
- •FundCompare tool (compare all funds side-by-side)
Step 6: Consider Age-Based Factors
Your age and retirement timeline are commonly considered factors when thinking about fund types. Here's a general educational framework—individual circumstances vary and you should consider your own situation or seek professional advice:
Typically Consider: Growth or Aggressive Funds
With 30-40+ years until retirement, longer timeframes generally allow more time to recover from market volatility. Growth funds have historically delivered higher long-term returns but with greater short-term fluctuations.
Typically Consider: Growth or Balanced Funds
With 15-30 years to retirement, many investors still prioritise growth. Some choose to begin reducing volatility in their 40s as retirement approaches. Individual risk tolerance varies.
Typically Consider: Balanced Funds
With 5-15 years until retirement, balanced funds may offer a middle ground between growth and capital protection. Some investors gradually shift toward more conservative options during this period.
Typically Consider: Balanced or Conservative Funds
Many investors shift toward capital preservation closer to retirement, as there is less time to recover from market downturns. Conservative or balanced funds typically offer more stability.
Typically Consider: Conservative Funds
For those withdrawing funds, conservative funds typically minimise the risk of losses. Those keeping funds invested for longer may consider different allocations depending on their goals and risk tolerance.
Note for First Home Buyers:
If you plan to use your KiwiSaver savings for a first home within 3-5 years, you may want to consider more conservative fund options to help protect your deposit from short-term market fluctuations. After purchasing your home, you can reassess your fund choice based on your new retirement timeline. Learn more →
Making Your Final Decision
Your KiwiSaver Selection Checklist
Frequently Asked Questions
Can I switch KiwiSaver providers after I've chosen one?
Yes, absolutely. You can switch providers at any time, and there's no limit to how many times you can switch. Most switches are completed within 1-2 weeks. There are no penalties for switching, though some providers charge exit fees (check before switching). See our switching guide →
Should I choose the same provider as my bank?
Not necessarily. While bank-owned KiwiSaver schemes can be convenient, they're not always the higher-returning or lowest cost. Banks like ANZ, ASB, BNZ, and Westpac offer solid options, but independent providers like Simplicity, Milford, and Fisher Funds often outperform on fees or returns. Choose based on performance and fees, not just convenience.
What's the difference between active and passive fund management?
Passive funds track market indices (like the NZX 50 or S&P 500) with minimal intervention, resulting in lower fees (typically 0.2-0.6%). Active funds employ professional managers who try to beat the market through strategic buying and selling, charging higher fees (typically 0.8-1.5%). Research shows passive funds often outperform active funds over long periods once fees are accounted for.
How often should I review my KiwiSaver choice?
Review your KiwiSaver account at least annually, ideally around your birthday or the start of each year. Also review after major life events: getting married, having children, buying a home, changing jobs, or within 5 years of retirement. Regular reviews ensure your fund still aligns with your goals and circumstances.
Is it worth switching for a small fee difference?
Small percentage-point fee differences compound over time. Illustrative — on a sample balance of $50,000 a sub-1-percentage-point fee gap costs roughly a sample dollar amount per year on that balance, but compounds over 30 years with ongoing contributions to a materially larger swing in the age-65 balance. Always compare net-fee return (not just fees alone) and consult a licensed financial adviser if you are unsure.
Ready to Find Your Perfect KiwiSaver Fund?
Use our comprehensive comparison tools to evaluate all KiwiSaver providers side-by-side and make an informed decision.
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